First and foremost, I would like to Wish you an abundant, joyous and prosperous 2022!
As of this writing, the real estate boards haven’t released the monthly stats for the month of December yet, so I’ll have to write on a different topic as I have originally planned.
By the time you read this article in the Discovery Islander you have probably already received your BC Assessment report, so I’d like to give you some information about what this report is and how it’s compiled.
BC Assessment is a Crown Corporation created as an independent impartial party to keep consistency and order. The corporation employs 650 full-time staff positions in 17 offices throughout the province. B.C. Assessment's annual budget is just over $77 million.
The value is determined based on property type and which method was used. There are several types of methods but the most common method for residential properties is the “Sales comparison method”. This method determines market value of properties based on most current data of sold units that are comparable in any given area. Land assessments are based on its most reasonable and optimal use which is both physically possible and financially feasible.
For example, vacant downtown land may be valued at its development potential rather than existing use. BC Assessment will consider many factors when determining highest and best use; including zoning, official community plans and recent development trends.
The assessed value of your home is broken down into 2 categories: Land, and Buildings. The report also includes comparable information on your previous year’s value.
Please note that the value assigned to your property is already outdated when you get it in your mail, because it’s based on data of sold units provided by the real estate boards as of July of last year. There are 5 more months of active market that are not included in that report.
How relevant is Assessed value during a real estate transaction? This is the second most common question I hear on regular basis from my clients. The answer is as usual: “It depends”.
As a Realtor my job as a listing agent is to sell it to a potential buyer, to their agent and most importantly to the bank that will provide financing to the buyer.
In a sellers market like we have seen over the last few years, the market can seem all over the place with prices. The bottom line is that the market will dictate what a property will sell for, provided that the bank is in agreement. For example, A buyer can be very excited about a property they’d like to purchase. They participate in a multiple offer situation where they have outbid all competing offers. What happens now? Depending if the buyer is a cash buyer or if financing is required, the bank will consider the BC assessment report as a factor in granting financing or in some cases, not.
If the offer is viewed as unreasonably high and not in line with how the market has behaved in the area, the banks can refuse to finance the mortgage for the buyers or assign conditions before financing can be finalized.
The truth is that the BC assessment report is used mostly for tax purposes. The market value of a property is determined by the economic forces of demand and supply. Our biggest issue in the real estate market is very low inventory and a very high demand for properties. There simply aren’t enough homes for sale to meet the demand. That’s what we are being told by the governments and it seems consistent with what we are seeing in the market place.
Is BC Assessment important in the purchase or sale of your home? Yes. It’s considered to determine what the property taxes will be for the current year, as well as qualifying for a mortgage.
In a strong sellers market, it is very common for properties to sell well above BC assessment values. When the market changes into a buyers market, and it will change one day, buyers and lenders alike will be paying much closer attention to what the BC Assessment numbers are.
The most accurate appraisal of your property can be obtained from a property appraisal company or your REALTOR®
If you haven't received your statement yet but you're curious, here's a link https://www.bcassessment.ca/
Are you thinking of selling your home? Call me for a free home evaluation.
Roman Krzaczek REALTOR ®
Home number: 250-285-2141